Question

QUESTION
Mr J. Walker, a trader in Lusaka’s Kamwala area, has not been keeping books of accounts till now when he has hired you to be his book keeper. The following are the opening balances on May 1, and the transactions for the operations of the month:
May 2019
1 Assets: Premises K34,000; Van K5,125; Fixtures K810; Inventory K6,390; Accounts receivable: P. Mullen K140, F. Lane K310; Cash at bank K6,240; Cash in hand K560.
Liabilities: Accounts payable: S. Hood K215, J Brown K640.
2 Paid storage costs by cheque K40.
3 Goods bought on credit from; S. Hood K145; D. Main K206; W. Tone K96; R. Foot K66.
4 Goods sold on credit to: J. Wilson K112; T. Cole K164; F. Syme K208; J. Allen K91; P. White K242; F. Lane K90.
7 Paid for motor expenses in cash K60.
9 Cash drawings by proprietor K150.
Page 2 of 2
11 Goods sold on credit to: T. Cole K68; J. Fox K131.
14 Goods returned to Walker by; J. Wilson K32; F. Syme K48.
16 Bought another van on credit from Abel Motors Ltd K4,850.
19 The following paid Walker their accounts by cheque less 5 per cent cash discount: P. Mullen; F. Lane; J. Wilson; F. Syme.
22 Goods returned by Walker to R. Foot K6.
24 Goods bought on credit from: L. Mole K183; W. Wright K191.
27 The following accounts were settled by Walker by cheque less 5 per cent cash discount: S. Hood; J. Brown; R. Foot.
27 Salaries paid by cheque K740.
30 Paid business rates by cheque K140.
31 Paid Abel Motors Ltd a cheque for K4,850.
Required:
i. Post the journal entries for the opening balances complete with narrations.
ii. Record the daily transactions in the appropriate book of original entry.
iii. Open the appropriate accounts in the Purchases Ledger, Sales Ledger, and the General Ledger and post the transactions.
iv. Balance off the General Ledger accounts.
v. Prepare the closing Trial Balance as at 31 May 2019.

Answer 1

Solution:-

1) Journal Entry For opening Balance:

Date	Particulars	Amount	Amount
May 1	Premises A/c Dr.	34,000
	Van A/c Dr.	5,125
	Fixtures A/c Dr.	810
	Inventory A/c Dr.	6,390
	Account Receivable A/c	450
	Cash at Bank A/c	6,240
	Cash in Hand A/c	560
	To Accounts Payable A/c		855
	To Capital A/c		52720
	(For Assets and Liabilities brought Forward)

2. Journal Entry

Date	Particulars	Amount	Amount
May2	Storage Expenses A/c Dr.	40
	To Bank A/c		40
	(For storage Expenses paid)
May 3	Purchases A/c Dr.	513
	To S. Hood		145
	To D. Main		206
	To D. Tone		96
	To R. Foot		66
	(For goods Purchased on Credit)
May 4	J. Wilson	112
	T. Cole	164
	F. Syme	208
	J. Allen	91
	P.White	242
	F. Lane	90
	To Sales A/c		907
	( For goods sold on Credit)
May 7	Motor Expenses A/c Dr.	60
	To Cash A/c		60
	(For motor Expenses Paid)
May 9	Drawings A/c Dr.	150
	To Cash A/c		150
	(For cash Drawings by Proprietor)
May 11	T. Cole	68
	J. Fox	131
	To Sales A/c		199
	(For goods sold on credit)
May 14	Sales Return A/c Dr.	80
	To J. Wilson		32
	To F. Syme		48
	( For sales return by j. Wilson and F. Syme)
May 16	VAN A/c Dr.	4,850
	To Abel Motors Ltd.		4,850
	(For van bought in credit)
May 19	Bank a/c Dr.	655.5
	Discount Allowed A/c Dr.	34.5
	To P.Mullen		140
	To F. Lane		310
	To J. Wilson		80
	To F. Syme		160
	(For cheque received from Account receivable and discount allowed)
May22	R. Foot Dr.	6
	To Purchase Return A/c		6
	(For goods returned)
May24	Purchase A/c Dr.	374
	To L. Mole		183
	To W. Wright		191
	(For goods Purchased on Credit)
May 27	S. Hood Dr.	360
	J. Brown Dr.	640
	R. Foot Dr.	60
	To Discount Received A/c		53
	To Bank A/c		1007
	(For Accounts Payable settled by paying Cheque)
May 27	Salaries A/c Dr.	740
	To Bank A/c		740
	(For Salaries paid in Cash)
May 30	Business Rates A/c Dr.	140
	To Bank A/c		140
	(For Business Rates paid)
May31	Abel Motors Ltd. Dr.	4850
	To Bank A/c		4,850
	(For payment made to Abel Motors Ltd.)

3. Ledgers

Premises A/c

Date	Particulars	Amount	Date	Particulars	Amount
1-May	Beg. Bal	34,000	31-May	End Balance	34,000

Van A/c

Date	Particular	Amount	Date	Particular	Amount
1-May	Beg. Balance	5,125	31-May	End balance	9,975
16-May	To Abel Motors Ltd.	4,850

Fixtures A/c

Date	Particular	Amount	Date	Particular	Amount
1-May	Beg. Balance	810	31-May	End Balance	810

Inventory A/c

Date	Particular	Amount	Date	Particular	Amount
1-May	Beg. Balance	6,390	31-May	End Balance	6,390

Account Receivable A/c

Date	Particular	Amount	Date	Particular	Amount
1-May	Beg. Balance	450	14-May	By Sales Return A/c	80
4-May	To Sales A/c	907	19-May	By Bank A/c	655.5
11-May	To Sales A/c	199	19-May	By Discount Allowed A/c	34.5
			31-May	End Balance	786

Bank A/c

Date	Particular	Amount	Date	Particular	Amount
1-May	Beg. Balance	6,240	2-May	By Storage Expenses A/c	40
19-May	To Account Receivable A/c	655.5	27-May	By Account Payable A/c	1007
			27-May	By Salaries A/c	740
			30-May	By Business Rates A/c	140
			31-May	By Abel Motors Ltd.	4,850
			31-May	End balance	118.5

Cash A/c

Date	Particular	Amount	Date	Particular	Amount
1-May	Beg. Balance	560	7-May	By Motor Expenses A/c	60
			9-May	By Drawings A/c	150
			31-May	End balance	350

Account Payable A/c

Date	Particular	Amount	Date	Particular	Amount
22-May	To Purchase Return A/c	6	1-May	Beg. Balance	855
27-May	To Discount Received A/c	53	3-May	By Purchases A/c	513
27-May	To Bank A/c	1007	24-May	By Purchases A/c	374
31x-May	End Balance	676

Capital A/c

Date	Particular	Amount	Date	Particular	Amount
31-May	End Balance	52,720	1-May	Beg. Balance	52,720

Storage Expenses A/c

Date	Particular	Amount	Date	Particular	Amount
2-May	To Bank A/c	40	31-May	End Balance	40

Purchases A/c

Date	Particular	Amount	Date	Particular	Amount
3-May	To Account Payable A/c	513	31-May	End Balance	887
24-May	To Account Payable A/c	374

Sales A/c

Date	Particular	Amount	Date	Particular	Amount
31-May	End Balance	1106	4-May	By Account Receivable A/c	907
			11-May	By Account Receivable A/c	199

Motor Expenses A/c

Date	Particular	Amount	Date	Particular	Amount
7-May	To Cash A/c	60	31-May	End Balance	60

Drawings A/c

Date	Particular	Amount	Date	Particular	Amount
9-May	To Cash A/c	150	31-May	End Balance	150

Sales Return A/c

Date	Particular	Amount	Date	Particular	Amount
14-May	To Account Receivable A/c	80	31-May	End Balance	80

Abel Motors Ltd.

Date	Particular	Amount	Date	Particular	Amount
31-May	To Bank A/c	4,850	16-May	By Van A/c	4,850

Discount Allowed A/c

Date	Particular	Amount	Date	Particular	Amount
19-May	To Account Receivable A/c	34.5	31-May	End Balance	34.5

Purchase Return A/c

Date	Particular	Amount	Date	Particular	Amount
31-May	End Balance	6	22-May	By Account Payable A/c	6

Discount Received A/c

Date	Particular	Amount	Date	Particular	Amount
31-May	End Balance	53	27-May	By Account Payable A/c	53

Salaries A/c

Date	Particular	Amount	Date	Particular	Amount
27-May	To Bank A/c	740	31-May	End Balance	740

Business Rates A/c

Date	Particulars	Amount	Date	Particulars	Amount
30-May	To Bank A/c	140	31-May	End Balance	140

4. Trial Balance

Particulars	Debit	Credit
Premises A/c	34,000
Van A/c	9,975
Fixtures A/c	810
Inventory A/c	6,390
Account Receivable A/c	786
Bank A/c	118.5
Cash A/c	350
Account Payable A/c		676
Capital A/c		52,720
Storage Expenses A/c	40
Purchases A/c	887
Sales A/c		1106
Motor Expenses A/c	60
Drwaings A/c	150
Sales Return A/c	80
Discount Allowed A/c	34.5
Purchase Return A/c		6
Discount Received A/c		53
Salaries A/c	740
Business Rates A/c	140
Total	54,561	54,561

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